HOMEownership Down Payment & Closing Cost Assistance Program

HOMEownership Down Payment & Closing Cost Assistance Program

Virginia Department of Housing and Community Development

VA Department of Housing and Community Development 600 East Main Street, Suite 300

Richmond, VA 23219 Telephone: (804) 371-7000 Fax: (804) 371-7090

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HOMEownership Down Payment & Closing Assistance Program

Table of Contents

INTRODUCTION .................................................................................................................... 4 PROGRAM DESCRIPTION ................................................................................................ 4 PROGRAM REQUIREMENTS ............................................................................................ 5 I. CLIENT ELIGIBILITY: .......................................................................................... 6 II. HOMEBUYER OR BENFICIARY CRITERIA AND PROGRAM GUIDELINES: ..... 6 III. INCOME DETERMINATION: ...............................................................................11 IV. SITE OR MONITORING VISITS: .........................................................................11 V. ADMINISTRATORS' FINANCIAL AUDITS: .........................................................12 VI. REPORTING CHARACTERISTICS AND OUTCOMES OF THOSE COUNSELED FOR HOMEOWNERSHIP:...................................................................................12 VII. PROCESS STEPS AND REQUIREMENTS:........................................................12 VIII. PROGRAM ADMINISTRATIVE COSTS SCHEDULE: .........................................13

Appendix A Appendix B Appendix D Appendix E Appendix F Appendix G Appendix H Appendix I Appendix J Appendix K Appendix L Appendix M Appendix N

Appendices Document Checklist Recorded Restricted Deed of Covenant HUD Set Up/Completion Form Disbursement Request Form DPA Subsidy Layering Review Worksheet Promissory Note Homebuyer Authorization Agreement Financial Information Sheet URA Voluntary Sales Notice Income Calculator Worksheet Maximum Subsidy Limit Worksheet Homebuyer Federal Assistance Certification Visual Lead Base Paint Assessment Form

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INTRODUCTION

The HOMEownership Down Payment & Closing Cost Assistance Program operates through local partnerships with governmental entities, non-profit housing service providers, and mortgage lenders across the Commonwealth. DHCD is seeking to competitively maintain a regional network of grant administrators who offer housing counseling and pre-qualification screening for eligibility on a first-come, first-served basis to address all regions of the state targeting first-time homebuyers with incomes at or below 80% of the Area Median Income (AMI) as established by the U.S. Department of Housing and Urban Development (HUD). The program structure must promote equitable access to HOME funds by both entitlement and non-entitlement communities based on income and credit criteria. The assistance is offered as a forgivable loan to eligible homebuyers.

PROGRAM DESCRIPTION

PROGRAM GOAL: HOMEOWNERSHIP ASSISTANCE

The HOMEownership Down Payment & Closing Cost Assistance Program is a flexible gap financing program that provides opportunities for first-time homebuyers to obtain homes that are safe, decent, and accessible. The long term goal is sustainable housing and growth in personal wealth and equity for low-income Virginians. Applicants who submit proposals to administer HOME funds for DHCD must have a program of assistance outlined that would provide a mechanism to qualify eligible homebuyers based on actual financial need, on a first-come, firstserved basis.

Applicants must demonstrate the capacity to identify target markets, housing stock and homebuyers to increase the numbers of homeowners in Virginia. Applicants must describe a clear plan of action which demonstrates their knowledge of, and past work with, the target markets, barriers to access, available qualified housing stock, and potential homebuyers who are either currently prepared or who will be prepared in the very near future to enter homeownership. The goal of "placing low- income persons in the position of homeownership" is too vague; the goals of the program must be clearly defined and stated outcomes must be measurable.

In order to describe the need for housing assistance costs of the target population applicants should not rely solely on waiting list information maintained by their organization. Organizations should collaborate with other local sources such as housing assistance waiting lists, other housing program grantees and administrators, social service agencies, area agencies on aging, and local building and fire officials to determine target populations. Program designs that emphasize public/private partnerships will be given priority consideration.

APPLIED FORMULAS FOR ALL HOME-ASSISTED UNITS

Administrative requirements for the HOMEownership Down Payment & Closing Cost Assistance Program will follow the established guidelines specified in the HOME Final Rule. The maximum amount of direct assistance to the homebuyer cannot exceed 10% of the sales price, and should be determined by a debt to income ratio analysis that does not exceed the maximum FHA standard on a first mortgage loan for housing costs and revolving debt. Homebuyers in localities of the state THAT have been designated as "high cost areas" or "chronically economically

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depressed" (see addendum A) may receive "up to" 15% of the sales price as the need demands. In addition, the Regional Administrator can provide an additional $2,500 in HOME subsidy to cover eligible closing costs not adequately paid by the seller.

HIGH COST/CHRONICALLY ECONOMICALLY DEPRESSED Localities:

Albemarle Alexandria Allegany Annandale Arlington Bath Bland Buchanan Carroll Charlottesville Clark Craig Culpepper Dickenson Fairfax Falls Church Fauquier

Floyd Frederick Fredericksburg Giles Grayson Herndon Highland King George Lee Loudon Madison Manassas McLean Montgomery Nelson Orange Page

Prince William Pulaski Rockingham Russell Salem Scott Shenandoah Smyth Spotsylvania Stafford Tazewell Warren Winchester Wise Wythe

PROGRAM REQUIREMENTS

The HOMEownership Down Payment & Closing Cost Assistance Program is designed to operate through local partnerships with governmental entities, non-profit housing service providers, and mortgage lenders across the Commonwealth. Administrators selected to administer the HOME program funds must be units of local government or nonprofit organizations that are actively participating in housing programs on a regional basis. Administrators may be located in HOMEentitlement areas of Virginia as long as they also provide service through their organization to non-entitlement communities.

The HOME program specifically requires: Down payment and closing costs for identified populations where total family household income does not exceed 80 percent of the area median income; Supportive services including preliminary homebuyer services; i.e., pre-qualification screening, and housing counseling services; Access to HOME program funds must be offered on a first-come, first-served basis; and Assisted housing and associated costs cannot exceed 95 percent of the area median home sales price, which are established by HUD.

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